The company registration process in Nepal looks straightforward on paper. In reality, many foreign companies face delays, rejections, or compliance risks due to avoidable mistakes. These errors often arise from unfamiliarity with Nepal’s legal framework, regulatory sequencing, and post-registration obligations.
This guide breaks down the most common mistakes foreign investors make during company registration in Nepal, explains why they happen, and shows how to avoid them. If you are planning to enter Nepal, this article will help you save time, money, and regulatory stress.
Nepal welcomes foreign investment, but its system is rule-driven and document-heavy. The process involves multiple authorities, each with distinct mandates.
Key regulators include:
Office of Company Registrar (OCR)
Department of Industry (DOI)
Nepal Rastra Bank (NRB)
Inland Revenue Department (IRD)
Local governments
Missing one requirement can stall the entire registration.
Before diving into mistakes, here is a simplified view of the company registration process in Nepal for foreign companies:
Name reservation at OCR
Foreign investment approval (FITTA 2019 via DOI)
Company incorporation at OCR
Tax registration (PAN and VAT)
NRB approval for capital injection
Bank account opening and capital repatriation compliance
Post-registration labor, SSF, and sectoral licenses
Each step depends on the accuracy of the previous one.
Foreign companies often assume that a private limited company is always the best option. That is not always true.
Common options include:
Private Limited Company
Branch Office
Liaison Office
Project Office
Choosing the wrong structure can lead to:
Restricted revenue activities
Tax inefficiencies
NRB repatriation issues
Why this happens:
Investors skip strategic structuring advice and register prematurely.
The OCR and DOI require precise shareholder disclosures.
Frequent errors include:
Mismatch between passport names and incorporation documents
Incorrect share percentages
Missing notarization or apostille
Under the Companies Act 2006, inconsistencies trigger formal objections.
Nepal does not impose a universal minimum capital. However, sector-specific thresholds apply.
Examples:
IT services may require lower capital
Manufacturing or infrastructure requires higher thresholds
Certain sectors remain restricted under FITTA 2019
Failing to align capital with sector rules causes DOI rejection.
Generic MOA and AOA templates are one of the biggest risks.
Common drafting issues:
Overly broad objectives
Objectives that violate sectoral laws
Missing foreign investment clauses
These documents define what your company can legally do in Nepal.
NRB approval governs:
Capital inflow
Foreign currency conversion
Dividend repatriation
Loan servicing
Foreign companies often register first and think about NRB later. This is backwards.
Result: Funds cannot legally enter Nepal.
PAN registration is mandatory. VAT registration depends on turnover and sector.
Mistakes include:
Late PAN registration
Wrong tax category
Ignoring withholding tax rules
Under the Income Tax Act 2002, penalties apply even if revenue is minimal.
Registration does not mean you can operate.
Additional requirements may include:
Local municipality licenses
Industry-specific permits
Labor registration
Skipping these can result in forced shutdowns.
Once employees are hired, compliance becomes mandatory.
Key laws include:
Labour Act 2017
Social Security Fund Act 2018
Bonus Act 1974
Common oversights:
No SSF enrollment
Incorrect leave policies
Non-compliant employment contracts
Low-cost agents often focus only on OCR registration.
Risks include:
No NRB guidance
No tax structuring
No compliance roadmap
This leads to expensive fixes later.
Annual obligations are frequently ignored.
These include:
Annual returns at OCR
Tax filings
Audit submissions
FITTA reporting
Non-compliance can freeze repatriation rights.
| Area | Common Mistake | Best Practice |
|---|---|---|
| Structure | Default private limited | Strategic entity selection |
| Documentation | Generic templates | Nepal-specific drafting |
| Capital | Arbitrary amounts | Sector-aligned planning |
| NRB | Handled later | Integrated from start |
| Tax | Reactive registration | Proactive tax mapping |
| Labour | Ignored initially | Compliance-first HR setup |
Watch out if:
Your application keeps getting “remarks”
Banks refuse to accept capital
Authorities give conflicting instructions
Your objectives are repeatedly questioned
These signal structural or documentation flaws.
A compliant approach includes:
Legal and tax review before incorporation
Sector-specific feasibility checks
NRB planning before capital transfer
Post-registration compliance calendar
This reduces risk and accelerates approvals.
Nepal’s system rewards accuracy, not speed.
Professional advisors help you:
Align with FITTA 2019
Protect repatriation rights
Avoid tax exposure
Scale compliantly
This is especially critical for foreign-owned entities.
The company registration process in Nepal is manageable when done correctly. Most problems arise from preventable mistakes. Poor structuring, weak documentation, and ignoring post-registration compliance create long-term risk.
Foreign companies that invest in proper planning from day one enter Nepal faster, safer, and more profitably.
Planning to register a company in Nepal?
Speak with a Nepal market-entry specialist before you file. A short consultation can save months of delays and costly corrections.
👉 Book a company registration consultation today
The most common mistake is registering a company without aligning structure, capital, and objectives with FITTA 2019 and NRB rules.
No. NRB approval is mandatory for capital inflow and foreign exchange compliance, even after OCR registration.
If done correctly, 2–4 weeks. Mistakes can extend the timeline to several months.
No. VAT depends on turnover and sector. PAN registration is mandatory for all.
Yes, but corrections require amendments, approvals, and additional cost. Prevention is cheaper.